Ripple’s Legal Chief Demands SEC Clarity in New Letter

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Is the SEC Playing Hide and Seek with Crypto? You Won’t Believe What Ripple‘s Legal Chief Just Said!

So, here we are, folks. The letter, which I can only assume was written in a dimly lit room filled with legal textbooks and a hint of desperation, builds on Commissioner Hester Peirce’s “New Paradigm” speech. It tackles a question that’s been keeping crypto enthusiasts up at night: when does a crypto asset decide it’s too good for its investment contract? Talk about a mid-life crisis!

In this riveting correspondence, Alderoty, Ripple’s legal chief (who I imagine wears a cape when he writes), reiterated Ripple’s position. He’s got the backing of legal scholars and Judge Torres’s 2023 ruling, declaring that XRP is not inherently a security. He even quoted The Ineluctable Modality of Securities Law by Lewis Cohen and friends, arguing that once a token breaks up with its promises, it should be free to roam the wild without being labeled a security. It’s like a bad breakup, but with more paperwork.

The letter takes a swing at the SEC’s broad enforcement model, which is about as clear as mud. Alderoty insists we need legal boundaries, not vague terms like “fully functional” or “sufficiently decentralized.” I mean, who even defines “sufficiently”? Is there a scale? A ruler? A magic eight ball?

Ripple proposes a two-part framework to determine if a token is still clinging to its investment contract like a toddler to a parent’s leg:

  • Does the issuer have any outstanding, unfulfilled material promises made during the initial offering? (Spoiler: If they do, it’s a red flag.)
  • Does the current holder have enforceable rights from those promises? (If not, it’s time to move on, buddy.)

If both are absent, the asset should be presumed to have cut ties with its investment contract. It’s like a legal emancipation!

Alderoty emphasizes that creating a safe harbor for well-meaning crypto innovators could clear up regulatory fog and encourage compliant development. But, of course, he warns that these frameworks must respect current securities law and not stretch it like a pair of old sweatpants after Thanksgiving dinner.

In a dramatic conclusion, Ripple’s letter calls for Congress—not the SEC—to step in and define new rules where gaps exist. Until then, the SEC should focus on enforcing existing laws without overreaching, providing clarity without crushing innovation. Because let’s face it, we all know how much Congress loves to move quickly on anything, right? 🍿

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2025-05-28 19:26